Hedge Funds Selling Off Altice USA

During the third quarter, almost fifty hedge funds sold over half a billion dollars of shares in Altice USA, as the cable company continues to struggle from apprehensions over debt. Altice USA had the second-largest U.S. initial public offering this year in June, raising $1.9 billion from investors. The company’s share initially increased but since have fell 38 percent to an all-time low.

On November 10th, parent company Altice NV fired its chief executive and founder Patrick Drahi will come back as president in a bid to reassure investors since shares plunged 30 percent in just a week. Altice USA’s debt is just about 50 billion euros ($58.95 billion) and has been a large concern for investors as well.

According to filings, forty-nine hedge funds decreased their positions in Altice USA during the third quarter, according to a study of 13F filings. Of those hedge funds, thirty-seven have exited their position entirely.

“The problem with a really levered company is that if something falls heavily and more than you think, is that the cushion isn’t very big,” said a partner at hedge fund firm that has exited their position. “People get scared when the chart starts going the wrong way. People leave the sinking ship very quickly.”

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There were 23.6 million shares sold over the third quarter by funds which represent one third of shares issued during Altice USA’s IPO, valued at over $640 million at the end of September. About a third was sold by Lone Pine Capital, who exited a position of 8.4 million shares worth $271 million dollars in June, according to the filings.

Altice USA’s IPO was a means for Drahi to grow his cable empire by giving the company public stock to be utilized as a currency to finance acquisitions. Altice USA declined to comment.

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